Journal of Islamic Business and Management2019, 9(2), 442-458

https://doi.org/10.26501/jibm/2019.0902-014

PRIMARY RESEARCH

Iranian Customers’ Understanding towards H. alal Logo and IslamicBrands

Yasaman Giyahi 1*, Vahid Khashei Varnamkhasti 21 Department of Business Administration, Faculty of Management and Accounting,Allameh Tabataba’i University, Tehran, Iran2 Department of Business Administration, Faculty of Management and Accounting,Allameh Tabataba’i University, Tehran, Iran

KeywordsIslamic Marketing,H. alal Brand,Islamic Brand,H. alal Certification

Received: 15-Mar-19Accepted: 6-Jul-19

Abstract: The purpose of this paper is to introduce h. alal logo as a new marketingparadigm, which marketers use as a means of distinguishing their products andservices in the competitive environment. This research aims to show the importanceof education and training in the area of h. alal and encouraging scientific societies aswell as industry players for further research on the subject. We examine whethercustomers look for the h. alal logo when purchasing products and services or whetherknow about the owner of the logo. We also study the dimensions on which theseproducts and services are considered as h.alal. The study employs applied researchand survey technique on a sample of 385 respondents who had the experience oftraveling to a foreign country, using random selection and conducting structuralequations modeling. The findings show that awareness about h. alal, level of commit-ment to religious rituals, marketing concept, h. alal certification and the true meaningof h. alal are considerable factors affecting the Iranian customers’ understanding to-wards h. alal logo and Islamic brands. Iranian customers are not sufficiently exposedto h.alal logo and h. alal brands through marketing communications, while to enhanceh. alal product and services, it is necessary to make increased use of marketing andbranding strategies. This research provides a model that marketers need to considerwhen presenting their products as an Islamic brand, as it shows the dimensionsof understanding and awareness of Iranian customers towards h.alal. Evidently,it requires cooperation among Islamic cooperation organization (an authority inissuing h. alal logo on brands in Iran), standard organization, and brand owners.

KAUJIE Classification: H54, P1, T6JEL Classification: M3, Z12

© 2019 JIBM. All rights reserved.

INTRODUCTION

The opportunity for distinguishing and providing a unique identity for products is very scant,to the extent that some individuals are inclined to believe that the costs of distinguishing

*Corresponding author: Yasaman Giyahi†Email: ysmn.giahi@gmail.com

Content from this work is copyrighted by Journal of Islamic Business and Management, which permits restricted commercial use, distribution and reproduction inany medium under a written permission. Users may print articles for educational and research uses only, provided the original author and source are credited in theform of a proper scientific referencing.

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outweigh its advantages. Since h.alal is an essential part of Islamic cultural networking,h.alal certification can provide us the possibility of searching for a new marketing paradigm(Rajagopal, Ramanan, Visvanathan, & Satapathy, 2011).

H. alal means permissible and in Islamic culture it denotes to something that Islam considersto be lawful and legitimate for its followers; the word h.aram is its antonym, meaning unlawfuland not conforming to the Sharı‘ah principles. All Muslims are obliged to use only thoseproducts that are permissible and conforming to Islamic laws and principles (Rajagopal et al.,2011).

Today, Muslims constitute a quarter of the world’s population and it is expected to rise to30 percent of total world population by 2025. Their cultural background is so natural andunconscious that usually their behavioral effect is overlooked. Thus, the h.alal phenomenonwill need to be globally recognized and used (Rajagopal et al., 2011). This makes a demandfor h.alal products to essentially grow across the world (Borzooei & Asgari, 2013). Muslimpopulation, growth in the number of youth and educated Muslim as new consumers in themarket, and increased awareness and demand for h.alal products and services due to emergingMuslim societies all over the world relating to immigration activities, add to the importanceof the issue (Abdul-Talib & Abd-Razak, 2013).

This significant demand motivates businesses to fight for and secure maximum marketshare. For instance, McDonald’s and Nestle invest substantially to capture an extensive shareof the market. In the competitive market, each product type offers many different brands andeach brand tries to win shelf space and attracts more consumers. H. alal as the central Islamicmarketing asset possesses the conditions and qualifications of a legitimate brand entity. Infact, the h. alal brand is a safe place to lessen the uncertainty associated with buying a product.It is also a source of establishing a strong relationship with consumers (Borzooei & Asgari,2013).

The market for h.alal products amounts to annually 150 billion dollars worldwide, involving20 percent of the total food industry, which continues to grow. In line with rising awarenessabout the h. alal market, it is claimed that there are many agencies in the world issuing 340h.alal certifications, while some of them are not following the principles and don’t possess therequired qualifications in this field. This trend has raised some concerns over the veracity ofh.alal certification, not only among Muslim consumers, but sellers and producers as well. Thefindings from a research by International Business Center in Abu Dhabi show that Islamicmarkets cover Muslims as well as non-Muslims, and as such, the presence of these concernscast a shadow on consumer trust and reassurance. In Australia, for example, at least 15organizations and in Netherlands 30 to 40 organizations are issuing h. alal certification; veryfew studies addressed this issue. The doubts created by h. alal certification increase, when it isrealized that we cannot call a product h. alal only because it has been produced by a Muslimcountry, which even its banking services are doubtful (Rios, Riquelme, & Abdelaziz, 2014).

Muslims should only use the certified h. alal products conforming to religious parameters.This will create a significant international market for h.alal products estimated at annually589 billion dollars. Also, there are considerable opportunities for food export to the MiddleEast and North Africa with a population of about 475 million people which import their food.

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International business for h.alal food already has been estimated at 80 billion dollars annually,or in other words, 5 percent of total world food trades. European Muslims also purchasea h. alal product, because they believe that these products are safe and healthy (Ireland &Rajabzadeh, 2011).

There are very few studies on Islamic world branding as it is presumed that brandingprinciples are the same as for the others. However, when consumers buy a h.alal product,regardless of the value they might place on it and subsequently do the purchase, they buybased on their belief. Branding in Islamic world acts like a double-edged sword: on the onehand, some very expensive brands known worldwide may be rejected by people of someMuslim countries like especially, Iraq, Libya and Afghanistan due to a perception of culturalimperialism. On the other hand, some local brands, like ‘Mecca-Cola’ in Saudi Arabia whichnever received popularity of world brands, may replace the famous international brands (Rioset al., 2014).

Along with the increase in Muslim population and the emerging values of the world marketof h.alal, it will be essential for companies to consider the opportunity created by this trend(Mohtar, Amirnordin, & Haron, 2014). The phenomenon of Islamic branding management asa separate and new combination has been of great interest for academicians and administratorsinside and outside of Muslim society across the world. The evidence of this can be foundin Islamic scientific journals in the field of business management and marketing agencies,proving Islamic branding consultation. The introduction of these new and distinct areas isnot only resulting from the identification of needed and demands, but importantly, it appearsthat there is a gap in intellectual schools of the brand and its frameworks, making it necessaryfor investigation (Wilson & Liu, 2011).

The current study examines awareness of the concept h.alal and Islamic brand amongIranian customers who have an experience of traveling to the foreign country. Based on thisknowledge, this question arises that how Iranians are aware of the correct meaning of h. alaland Islamic brand, living in a country with a dominant Muslim population? How much dothey show sensitivity when buying goods and services to ensure that it is h.alal?

There are a number of points to be noted: first, in countries like Iran, in contrast to otherIslamic countries like Malaysia, production of goods, whether made inside or imported fromoutside, must be according to the laws of Islam and be certified in terms of h.alal, thoughh.alal logo may not be easily observed, because in Iranian society it is taken for granted thatrelated authorities certify them in terms of being h.alal before allowing entrance into themarket. Secondly, the h. alal logo used on the products needs to be inspected and revised, asthe label on the product showing its issuance from the organization in charge which alsoindicates its identity, may not be necessarily on the product. Thirdly, a public offering ofproducts considered h. aram by Islamic law, throughout cities of the country is forbidden.Thus, there will remain no doubt for people that they can purchase products just based onquality and specific brand without looking for the h.alal logo on them. And finally, in the caseof the entrance of any such products into the market, people will be noticed by the ministryof health and medical education and religious leaders to not use these products.

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The existence of such assurances has made Iranian buyers less concerned with this issueas an indicator of their purchase decision making. Consequently, they do not induce anysense of demand and sensitivity to brands in feeling the need for making the customer awareof the item they are buying in terms of being h.alal. Therefore, no research on importance ofh.alal has been conducted in the field of Islamic marketing and consumers purchase behavior;while this subject is especially important in the event of Iranian exports to Islamic countries.

Considering these points, before trying to carry out detailed research on things such assupply chain, we need to find out consumers level of awareness on h. alal concept and Islamicbrand, so that we can do necessary planning for marketing activities especially outside thepromotion area; yet it is not restricted to inside of the country and if producers decide toenter exterritorial markets especially Muslim countries around Persian gulf region and northAfrica, it will require more careful and practical work on h. alal brand on products.

From the literature, above, following areas of research on consumer awareness on h. alalemerge:• Is consumer aware in his/her search for h. alal certification?• Does he know brands belonging to different groups of h. alal certification owners?• When purchasing products and services, which dimensions they consider to identify

h.alal?

Islamic MarketingAn important paradigm change has happened in modern marketing-a shift from consumer toareas of value which leads the concept of marketing towards human values. Evidently, h. alalis based on values called Islamic values. There is now a potential for creating a fully moralbrand through integrating Islamic values and features like caring about animal health use,for example, in processing and manufacturing food products under appropriate conditionswith the least amount of wastage. Islamic marketing is a new social science which is basedon principles of Sharı‘ah, looks at marketing performance, Islamic brands and the needs ofMuslims (Tieman & Ghazali, 2013; Tieman, van der Vorst, & Ghazali, 2012).

Wilson (2012) in a paper titled "An introduction to Islamic Marketing, branding andconsumer behavior based on 7P’s", argues that in Islamic Marketing, a relatively new area,new 7P’s should be defined (Wilson, 2012):• Pragmatism: Assessment of reality and the meaning of views and critiques, which are

rooted in an applied scientific approach and the real world.• Pertinence: Indicating relationship and adaptation.• Palliation: to fill gaps and reducing severity of hardships, while accepting that there are

many complex issues that their root will never disappear.• Peer-Support: Identifying and commitment to social networks of stakeholders that have

originality.• Pedagogy: Empowering stakeholders through providing instrumental concepts, methods

and evident ways of doing things.• Persistence: Continues work in spite of any difficulty.• Patience: Establishing a base for the duration of a topic.

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H. alalMuslim consumers are looking for the products and services, which adhere to Islamic lawsand norms. They want those products that have Islamic brand or h.alal brand and are basedon recognized principles which are not restricted to just food industry products, but includescosmetics, healthcare, pharmaceutical, logistics, tourism, and banking. H. alal food marketand Islamic finance sector have seen a significant growth in the last decade, added by manyother products and services such as cosmetics and health care products, hotels and construc-tion industries. Total investments in Islamic financial services has been increasing day byday, and the measurable amount of h.alal industry was expected to reach to 1 trillion U.S.dollars (Lada, Tanakinjal, & Amin, 2009; Yusof & Jusoh, 2014).

H. alal is a paradigm which requires understanding of some points (Wilson & Liu, 2010):• Condition-specific and multidimensional cultural characteristics• Strong moral views• Relationships far from mere materialistic and mechanical thinking• Strategic management operationsIncreased discussion and researches in the area of Islamic marketing have raised awareness

and interest of both Muslim and non-Muslim consumers about characteristics of Halal brands,so that it has been recognized as a symbol of cleanliness, safety and high quality amongnon-Muslim consumer in the world markets, leading to further academic research in this area(Yusof & Jusoh, 2014).

H. alal is no longer a mere religious issue, because, first, the market size of h.alal foodsand its development has grown in significant rate; and second, because of its politicalimportance. Growing popularity of h.alal can be attributed to religious bias and belief thath.alal products are safer and finer. H. alal is a commitment that secures all aspects of 1.6billion Muslims lives across the word (Lada et al., 2009). Muslim population growth, worldbusiness potential of h.alal and strong support from Islamic countries governments createmany opportunities for development in the area. Yet, lack of integrity and internationalprinciples in determining standards of h.alal, inability in creating a h.alal supply chain andusing informational technology in this area, and absence of sufficient knowledge on marketingof the products in this industry, are some of existing threats in the market (Ab Talib & Hamid,2014).

H. alal industry comprises of three groups (Alserhan, 2010a; Yusof & Jusoh, 2014):• Food industry: which at present is dominated by multinational brands like Nestle;• Lifestyle: similarly, like tourism services; and• Islamic services: especially financial services which could be changed in some region

especially in china and Europe due to their interest in this Market.When a product receives h.alal certification, the consumer will buy it with confidence and

trust because he or she is reassured the there is nothing to be concerned of (Rajagopal et al.,2011). To have h.alal certification means confirmation of the product by a formal authority incharge in terms of observing Islamic law principles through the whole process of the supplychain (Aziz & Chok, 2013). The good fame of h.alal products among non-Muslims relates to

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threats from unhealthy animals and relevant concerns, which has made them inclined towardsh.alal as safer and healthier products (Rezai, Mohamed, & Shamsudin, 2012). However, mereusing h. alal logo will not be sufficient. Labels carrying details of the product on them will beof great help to consumers for taking a fast decision (Yunos, Mahmood, & Mansor, 2014).

H. alal product must (Ab Talib, Hamid, & Zulfakar, 2015):• Not contain any non-h. alal parts or products of h.aram animals or products or animals

that are not slaughtered in the name of Allah and Sharı‘ah by methods;• Not contain any ingredients that are considered najis (unclean);• Is safe and not harmful;• Is not prepared, processed or manufactured using tools or equipment contaminated or

used together with non-h.alal or najis;• Have ingredients or by-products that do not contain any human part; and• During the process of manufacturing, preparation, packaging, storage or distribution, the

product must be physically separated from h.aram products.

Islamic BrandsMere production of a product or a brand in an Islamic country may not make that brand anIslamic brand or product, as not all products produced and provided in Islamic countriesnecessarily meet the standards and principles of Islamic law (Alserhan, 2010b). Jonathon andLia (2011) provided the following classification (Fig. 1: Classification of Islamic Brands) forIslamic brands (Cf: Wilson & Liu, 2011).

FIGURE 1. Classification of Islamic brands

Islamic branding can broadly be of the following categories: (Wilson & Liu, 2011)1. That follow Islamic laws, i.e., Islamic brands based on Islam as a religion2. Produced in an Islamic country, i.e., Islamic brands base on country of origin3. Their target customers are Muslims, i.e., Islamic governments based on destination

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The combination of these three groups gives four types of brands as shown in Fig. 2:1. True Islamic brands: This is the only group of brands that involves all three charac-

teristics; they are h.alal; are produced in an Islamic country and their target consumers areMuslims. The term "true" used here does not mean that other categories are wrong. Forexample, most of the brands produced in Islamic countries are h. alal, just because there areprimarily produced for Muslims’ consumption.

2. Traditional Islamic brands: The brands produced in an Islamic country, which targetMuslims. As mentioned above, it is presumed these products and services are h.alal. Prior toglobalization, all of these brands were considered to be h.alal.

3. Inbound Islamic brands: h.alal brands, which target Muslin consumers but are producedin a non-Muslim country. These have largely become Islamic, i.e., to be h. alal, made withsome changes.

4. Outbound Islamic brands: h.alal brands the origin of which is Islamic countries, but donot necessarily target Muslim consumers.

FIGURE 2. Categories of Islamic branding

TABLE 1Categories of Islamic Branding

IslamicBranding

Sample Brand Target Market Market Size Market Potential Marketing Focus

Inbound Nestle and KFC Muslims 1.5-1.8 billionconsumers

Substantial growth. TheMuslim population is thefast growing in the world

H. alal and reputed qual-ity of international brandsemphasized

Outbound Islamic financeand hospitality

Non-Muslims andMuslims abroad

Rest of the world Substantial growth dueto the introduction out-side the traditional Mus-lim market

Purity and humanity em-phasized, not h. alal, in or-der not to raise religioussensitivities

True Al Islami in UAE Muslims Same as inbound Same as inbound emphasize h.alal and patri-otism

Traditional Traditional localbrands

Muslims Same as inbound Same as inbound Emphasize patriotismmore than h. alal, althoughh.alal is assumed

Proposed Theoretical FrameworkIn this paper, the model shown in Fig. 3 was constructed in order to examine the determinantsof customer understanding of Islamic brands and h.alal. Its aim is to measure the relationship

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between awareness on h.alal consumption, h. alal certification, marketing concept, religiousbeliefs and categorizing Islamic brands with an understanding of Iranian h. alal products andservices.

FIGURE 3. The model of factors affecting Iranian customers’ understanding of h. alal logo and Islamic brands

Awareness about H. alal: In the context of h. alal, awareness describes human perceptionand cognitive reaction to a condition. It is special interest in or experience of somethingand/or being well informed of what is happening. According to studies on awareness andcognition, customers have a positive attitude towards awareness about h. alal principles (Aziz& Chok, 2013).

H. alal certification: Issuance of h.alal certification implies that a regular process of prepa-ration and delivery of h.alal products and services has been recognized. Thus, the produceris required to gain h.alal logo or h.alal conditions as an evidence to show its consistencywith religious principles and Qur’an (Aziz & Chok, 2013). Unfortunately, the process ofacquiring h.alal certification is very costly and long. Therefore, medium and small enterpriseare not inclined to take this certification; though, according to many customers, even if h. alalcertification leads to growing prices of products and services, their popularity and purchaselevel will not be affected (Shirkhodayi & Amirhosein, 2013).

Marketing concept: Customers reaction to marketing strategies has a significant effecton the companies’ success. Knowing about both marketing and management will providethe company with an instrument to be able to satisfy the customers’ needs (Shaari & Arifin,2010). we will examine how much successful they have been till now in promoting theirproducts as h.alal and how well they have affected customers’ awareness.

Belief in a religion: Based on the nature of human, religion significantly affects individual’sbehavior and attitude, because these are associated with religion and beliefs. Prior studiesshow that religion influences the individual’s choice of products and services. The religiosityof consumers plays a very important role in marketing and especially in advertising Shaari &

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Arifin, 2010).True meaning of H. alal: In the previous section, a detailed explanation was provided about

categorization of Islamic brands and the true meaning of h.alal. In this section, we willexamine to see in which condition a brand should be regarded as h.alal by consumers andcustomers, and in which groups of products and services h. alal brands have been defined bynow.

METHODOLOGY

In terms of purpose, this is an applied research; while from data collection method pointof view, it is a descriptive study of survey type. It is examining the relationship betweenawareness about h.alal, marketing concept, religious beliefs and categorizing Islamic brandwith an understanding of Iranian customers. Statistical population in this research comprisesof consumers with a background of traveling to a foreign country.

Regarding the characteristics of the statistical population, somewhat unbounded, weemployed simple random sampling; in terms of sample size, and 385 individuals were chosen.

TABLE 2Demographic Data on Respondents

Demographic Details Frequency Frequency AccumulativeVariables Percentage Frequency PercentageGender Female 241 62.6 62.6

Male 144 37.4 100.0Age 15-19 4 1.0 1.0

20-29 109 28.3 29.430-39 129 33.5 62.940-49 60 15.6 78.450-59 57 14.8 93.260 and above 26 6.8 100.0

Monthly Income Less than 1.5 million Tomans 169 43.9 43.91.5 to 3 million Tomans 155 40.3 84.2Higher than 3 million Tomans 61 15.8 100.0

Education Level Diploma or SPM 89 23.1 23.1Post-Diploma 33 8.6 31.7Bachelor 134 34.8 66.5Master 129 33.5 100.0

Working Status Public 51 13.2 13.2Private 134 34.8 48.1Self-employed 62 16.1 64.2Student 36 9.4 73.5Unemployed 33 8.6 82.1Others 69 17.9 100.0

Number of Travels to aforeign country

5 times or less 285 74.2 74.2

6 times or more 93 24.2 100.0Level of Religiosity Low commitment to religious rituals 61 15.8 15.8

Medium commitment to religious rituals 199 51.6 67.4High commitment to religious rituals 109 28.3 95.7Very high commitment to religious rituals 15 4 100

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TABLE 2Continue

Demographic Details Frequency Frequency AccumulativeVariables Percentage Frequency

PercentageForeign Travel Destina-tions

Islamic countries 186

Asian countries 228European countries 170North American countries 32South American countries 10African countries 19Australia and New Zealand 16

Understanding ofGroups of h.alal prod-ucts and Islamic Brands

Food products 346 89.8

Pharmaceuticals 167 43.3Cosmetics 151 39Leather products 131 34Banking and tourism services 142 37

Data was collected by designing a questionnaire both in paper and electronically, usingfive-point Likert scale with (5) strongly agree, (4) agree, (3) neither agree nor disagree,(2) disagree, (1) strongly disagree to obtain data for each of the constructs in the modelfor the study, 43 questions were examined. An electronic questionnaire was designed as aninternet link and was distributed to Iranian customers based on the set criteria.

TABLE 3Research Variables and Questionnaire Items

Research Variables Variable Name Cronbach AlphaDependent Variables Customers Understanding of h.alal -Independent Variables Awareness About h. alal 0.885Independent Variables H. alal Certification 0.796Independent Variable Marketing Concept 0.795Independent Variable Religious Beliefs 0.902Independent Variables True Meaning of h.alal 0.753

Descriptive Model: Structural Equation ModelingFor testing the research model shown in the Fig. 3, a statistical software package was em-ployed. In descriptive statistics, we calculated Pearson Correlation and conducted structuralequation modeling. SEM analysis has two parts: measuring model and structural equationmodel. Measuring model indicates how the latent variables or hypothetical concepts areassociated with or are specified by them. Therefore, this model describes the characteristicsof measurement of observed variables (validity and reliability) and determines specified or

452 Giyahi, Y., & Varnamkhasti, V. K. - Iranian customers’ understanding towards .... 2019

unspecified deviation. Meanwhile, structural equation model specifies the causal relationbetween latent variables; describes causality and determines explained or unexplained devia-tion. As mentioned above, this study uses LISREL 8.52 statistical package for testing thehypothetical model. LISREL 8.52 is especially designed for specifying the models, wherelatent variables, measurement errors and causality are combined. Furthermore, LISREL 8.52is designed for estimating and testing the model fit and causal relationship. SEM providesa statistical model of linear relations between latent variables (unobserved) and observablevariable (observed). One of the unique characteristics of SEM is its ability in providingparameter estimates for the relationship between latent variables. SEM is like path analysis inorder to provide parameter estimates for the direct and indirect relationship among observedvariables (Hooman, 1388).

FINDINGS

Descriptive Statistics and Correlation AnalysisTable 4 summarizes statistical indexes of the variable based on statistical analysis includingthe mean and standard deviation of each variable. Pearson correlation coefficient is also shownfor different variables. The mean of all variables, except for true h.alal meaning variable (2.81),is higher than average (number 3 in five-point Likert scale), suggesting that first 4 variablesare in good state and are higher than sample average. The positive and significant value ofcorrelation coefficient indicates a significant relation between the two variables. Accordingly,between independent variables of research, there is a pairwise positive and significantassociation. The highest correlation association is between two independent variables ofawareness about h. alal and religious beliefs, suggesting strong positive and significant relationbetween the two variables. Also, the lowest value of correlation coefficient is between h. alalcertification variable and the true meaning of h. alal variable (0/508), indicating mediumpositive and significant relation between the two variables.

TABLE 4Descriptive Statistics and Pearson Correlation Analysis (Quantity = 358)

Research Variables Average Standard Awareness Certification Concept BeliefsDeviation

1. Awareness about h.alal 3.43 1.01 12. H. alal certification 3.17 0.62 0.742**3. Marketing concept 3.55 0.61 0.744** 0.737**4. Religious beliefs 3.81 0.84 0.849** 0.708** 0.718**5. True meaning of h.alal 2.81 0.58 0.559** 0.508** 0.531** 0.532**

**p < 0.01

Confirmatory Factor Analysis (CFA)This research uses confirmatory factor analysis to examine validity and reliability for eachconstruct (research variables). Table 5 provides evidence of construct validity (divergent andconvergent validity), as all validity indices are lower than 0/60. Composite reliability and thesummary of mean-variance measurements also validate sample reliability. Common meanvariance between constructs and scales are higher than 0/50, which this acceptable value was

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suggested by Kalantary and Homan (Kalantari, 2009). Therefore, composite reliability isstrong, like Cronbach for structural equations, for all multiple scales which range from 0/76to 0/83. Overall, Table 4 shows that all 5 research constructs have acceptable validity andreliability.

TABLE 5Validity and Reliability of Research Variables

Construct No. of Questions Construct Validity Average VarianceExtracted

1. Awareness about h.alal 7 0.82 0.762. H. alal certification 8 0.85 0.773. Marketing concept 11 0.93 0.834. Religious beliefs 8 0.87 0.795. True meaning of h. alal 9 0.89 0.80

Structural Equation Model AnalysisThis study estimates equation model using maximum probability method (Kalantari, 2009).Perfect maximum probability model includes structural models which combine 5 latentvariables and 43 variables in order to test second-order confirmatory factor analysis.

Model fit testing: Before testing research hypothesis and concluding, it is necessary toensure if hypnotized model provides a good fit for the collected data. In working withLISREL program, each index acquired from model fit cannot on its own be a reason forgoodness-of-fit or the other way around, but these indices should be assessed and interpretedtogether (Kalantari, 2009). Common indices for the total model test are 1): fit statistic tothe degree of freedom ratio that is lower than 3, (2): goodness of fit indices which all ofthem have a threshold higher than 0.9. For a model, which has been carefully divided intosuitable data, usually 4 goodness of fit indices are assessed.: 1): goodness of fit index (CFI),2) Adjusted goodness of fit index (AGFI), 3) normed fit index (NFI), 4): Root Mean SquareError of Approximation (RMSEA), which should be lower than 0/08.

Table 6 shows a summary of estimation indices from structural equation model. The resultsshow a good fit for the hypothetical model. Model fit statistic to the degree of freedom ratiois below 3, suggesting sufficient model fit. The value of RMSEA has reached the acceptablevalue of below 0.8 (RMSEA = 0.035). Especially, values of GFI, AGFI, NFI and CFI showthe acceptable value of higher than 0/9 (0/99, 0/98, 1/00, and 1/00, respectively). All theindices are above the acceptable limit and are desired. Therefore, desired conditions of theseindices indicate that hypothetical research model (Fig. 3) is statistically significant and thismodel best fits the collected data.

TABLE 6Fit Indices for Conceptual Research Model

Estimation Index χ2/d. f GFI AGFI NFI NNFI CFI RMSEAResearch Model 1.46 0.99 0.98 1.00 1.00 1.00 0.035

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Hypotheses test: In order to assess the hypotheses 1 to 5, proposed hypothetical modelwas tested using LISREL 8.2. Factor loadings among independent variables and dependentvariables were estimated. The hypotheses related to this relation were tested based ont-statistic. Fig. 4 shows conceptual research model with the path coefficients. All ofthese coefficients are significant and positive ad validates all hypothesized relations amongvariables.

Awareness about h. alal is a factor significantly affecting customer understanding of h. alalbrand (B = 0/94). Awareness about h. alal certification is a factor significantly affectingcustomer understanding of h.alal brand (B = 0.79). Awareness about marketing concept is afactor significantly affecting customer understanding of h. alal brand (B = 0.80). Awarenessabout religious belief is a factor significantly affecting customer understanding of h.alal brand(B = 0.90). Awareness about the true meaning of h. alal is a factor significantly affectingcustomer understanding of h. alal brand (B = 0.60). Thus, 5 research hypotheses are confirmed.

TABLE 7Estimating Parameters of Structural Equation Modeling

Research Hypotheses ParameterEstimation

t-statistic

1. Awareness towards h.alal-Customers’ understanding of h.alal brand 0.94** 23.902. H. alal certification-Customers’ understanding of h.alal brand 0.79** 18.243. Marketing concept-Customers’ understanding of h. alal brand 0.80** 18.494. Religious beliefs-Customers’ understanding of h. alal brand 0.90** 22.395. True meaning of h. alal-Customers’ understanding of h.alal brand 0.60** 12.76

**p < 0.01

Customer s Understanding

0.80

0.940.79

0.90

0.60

Awareness Toward Halal

Halal Certification

Marketing Concept

Religious Belief

True Meaning of Halal

0.12

0.37

0.36

0.19

0.63

Customer s Understanding

18.49

23.9018.24

23.39

12.76

Awareness Toward Halal

Halal Certification

Marketing Concept

Religious Belief

True Meaning of Halal

6.37

2.06

11.98

9.01

13.31

Standard Model Significance Model

FIGURE 4. Coefficients estimation in conceptual model

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DiscussionThe purpose of this paper was to provide a model for Iranian customers’ understanding ofh.alal logo and Islamic brands. Five variables, namely awareness of h.alal, h.alal certification,marketing concept, level of religious belief, and true meaning of h. alal were measured; themean value of the last variable, i.e., true meaning of h. alal was reported below the average.Through structural equation modeling test, researchers’ hypotheses, namely, the effect ofawareness about h.alal with the highest effect on customer understating of the h. alal logo andIslamic brand (0.94), religious beliefs (0.90), marketing concept (0,80), h.alal certification(0.79), and the true meaning of h. alal were confirmed.

The information from individuals under study shows that Iranian customers’ understandingof h.alal; that what h.alal is and under which conditions, and in which product group theserules are definable, is low. The feedback from questionnaires indicates that concept of beingsafe and healthy commonly is believed to be applicable only to foods and drinks. In termsof products like pharmaceuticals, defining h. alal within this area for many was surprising.Islamic services such as banking services, though addressed in media, was not selected bymany as a product that could be defined by h.alal and Islamic brands.

The best answers and the most understanding belonged to those who had already beento a foreign country. True meaning of h. alal for these individuals regardless of the level oftheir religious beliefs was so tangible and much referred to difference taste and odor in h. alalfoods and drinks; even they would rather have h.alal food products at the expense of higherprice, though other non-h.alal foods were more abundant in market and easier to provide. So,those who had practical experience in dealing with h. alal, except for those living in Islamiccountries like Arab emirate, were familiar with different aspects of h. alal and Islamic brands.The best information came from Iranian students living in foreign countries as from the firstday of admission to university they are introduced by some centers like association for aMuslim student to a list of supermarkets, brands and product permissible by Islamic laws.

Another issue is that level of religiosity was not necessarily an indication of their exactawareness of various aspects of the subject under study. However, individuals who had morecommitment to religious rituals, after reading the questionnaire, showed more interest tobecome aware and learn about the subject.

CONCLUSION AND CONTRIBUTION

The results of this research seek to create awareness of the fact and the situation that has beenignored; the level of awareness of the Iranian people and their sensitivity to the h. alal issueindicates its recognition and importance in choosing Islamic brands. The fact is that, despitethe existence of shopping addiction, especially among Iranian youths, there is little or nosensitivity to this issue despite living in an Islamic country and a Muslim community, becausethe h. alal issue has been presumably approved for all the goods and services provided tothem. On the other hand, they do not recognize the extent of the goods and services that canbe defined in the h. alal chain, and they are often limited to food and drinks. This awarenesswas necessary to define and plan any other research in the h.alal field.

456 Giyahi, Y., & Varnamkhasti, V. K. - Iranian customers’ understanding towards .... 2019

Looking for a h.alal logo to find it on products at the time of buying, is not a tangible matterinside this country. As people are assured that whatever is bought in an Islamic country, thatis necessarily h. alal, they don’t feel necessary to take care of, which refers to the dimensionof the true meaning of h. alal. However, for something to be truly h. alal, three conditionsshould be met: target, religion, and destination. Raising public awareness through media, notin by educational programs but by focusing on advertisements from brands in various groupsof products and services, can make them sensitive to the issue of h.alal just as Iranians livingabroad were. Practical engagement makes it sustainable in mind. Also, some authorities likethe Standards Organization can play an important role in keeping the public informed andraise their awareness and understanding.

This study, before going on issues like exports of h. alal products and creating a h. alalsupply chain as done previously in Malaysia, aimed to focus on sensitivity and awarenessof Iranian people, as many think of h.alal only in terms of meat and poultry, not necessarilyaquatics.

IMPLICATIONS AND SUGGESTIONS

Further research on this topic requires the collaboration of the organizations that were referredto in the previous section, so that results can be achieved that are functional and not academic.Of course, they also need cooperation with the academic community for more accurateresearch. Otherwise, the results of organizational research usually remain confidential intheir organizations and do not define a solution to raise public awareness. The next researchthat needs to be performed is to realize which method will create and raise awareness in thiscommunity. This awareness is being used in Islamic branding, and brand owners can use itas a factor for competition in the domestic market. But it should also be noted that in orderto export goods and services to the Islamic countries and countries with Muslim populations,this aspect is one of the minimum requirements to be observed.

Paying attention to the h.alal issue can bring those new markets, which due to lack ofawareness and recognition, have been ignored so far. At the same time, Iranian brands canincrease the range of goods and services they can offer by focusing on the h. alal issue in thevalue chain of different industries. This issue is important because of Iran’s efforts to increasenon-oil exports.

To raise more awareness about the h.alal concept and Islamic brands, it is suggested thatfuture researcher examines the Muslim individuals who are residing in non-Islamic countries.It could be by the assistance of organizations like Islamic cooperation organization to bethe incharge of issuing h.alal certification in Islamic countries, The diversity of participantsin this research was more on those traveled to Islamic, Asian and European countries. Togain much better results, it is needed to increase the frequency of people residing or havinga background of already living in one of the countries in North America, South America,Africa, and Pacific.

Also, Iranian organizations such as Islamic cooperation organization office, and StandardOrganization, need to have further supervision and monitoring on these issues, as the prod-ucts which have received this certification, are not using unified logo on their products and

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therefore, it may not be easily remembered by the customers and consequently making itdifficult to distinguish between true and untrue logo.

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